Study: Post-breach, 30 percent of consumers would take business elsewhere

Share this article:
Report: Data breaches up 62 percent in 2013
The retail sector faced the stiffest reactions from consumers.

A new study examines the potential loss of business caused by data breaches, specifically those occurring in the retail, healthcare and financial sectors.

The report, released Tuesday, called “Avoidable Collateral Damage from Corporate Data Breaches,” (PDF) found that 33 percent of consumers would avoid further business with a retailer post-breach.

In the study, the retail sector faced the stiffest reactions from those polled, as 30 percent of individuals said they would search elsewhere for a new healthcare provider. Twenty-four percent of respondents said they would switch banks or credit card providers if their financial institution suffered a breach.

The study, which polled responses from 5,634 U.S. adults in October 2013, was representative of the U.S. census demographics distribution. Javelin Strategy & Research in Pleasanton, California conducted the study, which was commissioned by sensitive data management solution provider Identity Finder.

“Once thought to be a theoretical consequence, new evidence clearly shows consumers become less apt to open their wallets and patronize a company after a data breach,” the report said. “In addition to potential lost business and goodwill, a breached company may find itself saddled with the cost of litigation and subsidizing identity protection services for affected consumers.”

After Target's massive data breach over the holidays last year, a customer satisfaction study noted “meaningful decreases” in overall customer approval of the business. Furthermore, Standard & Poor lowered the mega-retailer's credit rating in the aftermath of the incident.

On Thursday, Al Pascual, senior analyst of security for risk and fraud at Javelin, told SCMagazine.com in an interview that goal of the report was to dig into breach costs to businesses, outside of the standard expenditures (like customer notification or identity protection services).

“We wanted to take a look at the issue affecting three main industries,” Pascual said. “There's a lot that puts a dollar and cents [loss] on the cost of breaches, but often the cost of some effects are overlooked.”

Share this article:

Sign up to our newsletters

More in News

Op Emmental spoofs bank sites, uses Android malware to maintain account access

Op Emmental spoofs bank sites, uses Android malware ...

On Tuesday, Trend Micro released a report detailing Operation Emmental, which targets victims in Austria, Switzerland, Sweden and Japan.

Goodwill investigates compromise of credit, debit card info

Credit card and debit card data may have been compromised at several Goodwill locations around the country.

Vice.com hacked, possibly The Wall Street Journal website too

Vice.com hacked, possibly The Wall Street Journal website ...

A reported Russian hacker group known as W0rm tweeted on Monday that it had hacked Vice.com and The Wall Street Journal website.